The decision to cut the funding was made by the Health Service Executive (HSE) until they provide confirmation that they are compliant with public health sector pay policy.

Those affected are St James’s Hospital, St Vincent’s University Hospital, St John of God, Brothers of Charity Southern Services, and Brothers of Charity Services South East.

In a statement released last night the HSE said the five agencies are deemed non-compliant as they have not made business cases for their pay levels.

They are also required to submit the necessary detailed business cases.

The HSE said the reduction in cash funding is not a budget cut and therefore should, under no circumstances, impact on the provision of services to patients or clients.

A total of 10 agencies are compliant with pay policy and further 27 have presented 88 business cases for additional allowances to be paid to senior staff.

An internal review panel of senior staff within the HSE has now been appointed to examine the business cases.

The review comes after a detailed audit of Section 38 agencies and whether or not they were in compliance with pay policy began last December.

As a result, some organisations stopped paying top-ups to senior staff while others are in the process of submitting a “business case” to the HSE outlining why they feel they should be maintained.

The cuts in funding for the five hospitals and agencies is the latest development in the top-up scandal which came to a head last year with revelations surrounding details of payments at the Central Remedial Clinic (CRC).